Hyderabad Metro Rail: L&T seeks relief from Telangana government for delay in project

Larsen and Toubro has sought "additional financial support" from Telangana to cover cost overruns in the Rs 16,000-crore metro rail project that stemmed from delays in its implementation, sources privy to the development said.

L&T Metro Rail (Hyderabad) is an L&T subsidiary, which is developing the metro at a total cost is Rs 16,375 crore. (Image by L & T Metro Rail)

Larsen and Toubro has sought “additional financial support” from Telangana to cover cost overruns in the Rs 16,000-crore metro rail project that stemmed from delays in its implementation, sources privy to the development said. Prime Minister Narendra Modi is scheduled to inaugurate the first phase of the 72-km project tomorrow, touted to be the world’s largest such project on public-private partnership in the sector. L&T Metro Rail (Hyderabad) Ltd, the developer of the project, has sought “additional financial support” from the Telangana government to cover the cost overruns due to delays in projects, leading to extension of time, the sources said. The cost overruns work out to over Rs 3,000 crore, the sources added. “The company is also learnt to have sought extension of period by two years,” an industry source said, adding that any decision is likely after consultation with the Centre as the urban development ministry is also part of the project. The project, which was originally slated to go on stream in July this year, was extended till November 2018 and Telangana minister K T Rama Rao recently confirmed it. Conceived in 2009, the 72-km project has overcome many hurdles such as default by first concessionaire Maytas Infra- led consortium and now, the present developer and subsequent developments, crucial land acquisition by the state government and logjam for sometime over route alignment, among others.

L&T, however, did not respond to the queries in this regard. A senior state government official said, “There would be cost escalations as the project got delayed.” He, however, said the government issues will be settled in accordance with the concession agreement. The project has got stuck in delays as L&T Metro Rail (Hyderabad) had over three years ago written a letter to the Telangana government offering to quit the Rs 16,000-plus crore project as the last resort if “issues” were not resolved. When asked if L&T offered to hand over the project to the government, the then chief executive and MD V B Gadgil had replied: “In case, the issues do not get settled.” “That (to quit) is one solution we have told them in case both of us are not able to resolve,” he had said after a meeting with the chief minister and the chief secretary in 2014. L&T has also written a letter to the state government on the matter.

L&T Metro Rail (Hyderabad) is an L&T subsidiary, which is developing the metro at a total cost is Rs 16,375 crore — Rs 14,132 crore for the metro rail system and another Rs 2,243 crore for the real estate development. According to available data, the concession agreement for the project totalling 72 km metro lines with 66 stations was executed in September 2010 while financial closure was achieved in April 2011. The first phase comprises 30 kms and 24 stations while the second phase of the remaining corridor barring a 6-km stretch — near Charminar — is expected to be commissioned by November 2018.